Credit Suisse credit insurance is not triggered
The depreciation of the AT1 bonds by Finma does not result in the default insurance being paid out, despite the impairment.
A Swiss flag flies above the Credit Suisse logo in Bern.
Image: Peter Klaunzer/Keystone
The write-down of the Credit Suisse AT1 bonds ordered by the Swiss Financial Market Supervisory Authority (Finma) will not trigger a payout of the default insurance (CDS). The Credit Derivatives Determinations Committee (CDDC) has decided that it is not a so-called “sovereign-involved credit event,” according to a response to an investor’s question published on Wednesday.
The CDDC said it reached this conclusion after reviewing the rating requirements for the AT1 securities listed in the investor’s application. There had been speculation in the market that the zeroing of the AT1 bonds would trigger payments.
As part of the takeover of Credit Suisse by UBS, which was ordered on March 19, AT1 bonds worth around CHF 16 billion were declared worthless by the Swiss supervisory authorities. Since then, complaints from more than 1,000 bondholders have been piling up at the Federal Administrative Court in St. Gallen.
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2023-05-19 05:33:15
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